CARACAS (Commodity Online) : In an attempt to ease acute power shortages in the country, Venezuelan President Hugo Chavez declared an energy emergency in the oil rich Latin American nation.

Venezuela is suffering from a drought as Pacific Ocean currents have changed weather patterns as part of the El Nino phenomenon, and Chavez has warned Venezuelans that the South American country's power woes could worsen if rains don't come as expected when the rainy season begins in May or June.

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Under emergency, Venezuelans who use more than 500 kilowatt-hours of electricity per month must reduce their consumption by 10 percent or be required to pay a 75 percent price increase.

Those who increase consumption by 10 percent will be slapped with a 100 percent price increase. If they boost usage by 20 percent, the price hike rises to 200 percent.

Venezuela imposed electricity and water rationing in December to prevent a collapse of the electricity grid as water levels behind the Guri Dam fell to critical lows. The dam supplies most of Venezuela's electricity.

Rolling blackouts lasting up to four hours are bring imposed throughout the country except the capital of Caracas as the country struggles with a severe drought.

Venezuelans who collaborate with the government to save energy will be rewarded, Chavez said.

Consumers who reduce their electricity usage by 10 to 20 percent will receive a 25 percent discount on monthly bills. And those who decrease consumption by more than 20 percent, will get a 50 percent discount.

Chavez said he would set an example, vowing that energy consumption at the presidential palace would drop significantly.

The energy conservation plan also requires big businesses and industrial complexes to reduce consumption by 20 percent or face sanctions, including 24-hour to 48-hour shutdowns.

Total power consumption has risen about 25 percent since 2004, a period during which Venezuela enjoyed an oil boom while electricity rates remained frozen, leaving little incentive to save energy. And millions of poor Venezuelans help themselves to electricity for free by splicing wires onto power lines, further straining the country's power grid.

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